So, you've just re-invented parts of TLS, but without a lot of important components that actually make it safe to use. The moral of the story is, don't try to invent your own cryptosystem, just use TLS instead.
– XanderApr 7 '16 at 13:52

1 Answer
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As to the differences, the linked article can be cited to get you started:

Stream ciphers are often used for their speed and simplicity of implementation in hardware, and in applications where plaintext comes in quantities of unknowable length like a secure wireless connection. If a block cipher (not operating in a stream cipher mode) were to be used in this type of application, the designer would need to choose either transmission efficiency or implementation complexity, since block ciphers cannot directly work on blocks shorter than their block size. For example, if a 128-bit block cipher received separate 32-bit bursts of plaintext, three quarters of the data transmitted would be padding. Block ciphers must be used in ciphertext stealing or residual block termination mode to avoid padding, while stream ciphers eliminate this issue by naturally operating on the smallest unit that can be transmitted (usually bytes).

Another advantage of stream ciphers in military cryptography is that the cipher stream can be generated in a separate box that is subject to strict security measures and fed to other devices such as a radio set, which will perform the xor operation as part of their function. The latter device can then be designed and used in less stringent environments.